Today, the European Commission has decided to refer Hungary to the European Court of Justice for granting an exemption from excise duty to the production of fruit distillates (pálinka).

Hungary exempts pálinka from excise duty when it is produced by households or distilleries for personal use, up to a maximum of 50 litres a year.

Excise duties for alcohol are harmonised under EU legislation in order to avoid distortions of competition in the internal market (Directive 92/83/EEC). Under that Directive, Hungary is allowed to grant a 50% reduction of the normal excise rate to pálinka produced by distilleries, for personal use, up to 50 litres a year. The exemption applied by Hungary to the production of pálinka therefore goes beyond what is allowed under EU legislation.

The referral to the EU Court of Justice is the last step in the infringement procedure.

Background

The European Commission sent a reasoned opinion to Hungary on 21 June 2012 (IP/12/674). Since Hungary has not withdrawn the contested measures the European Commission has decided to refer the case to the Court of Justice.

The Commission's case reference number is 2011/4062.

For press releases on infringement cases in the taxation or customs field see: